“Until now, we have only ever known a world of demographic growth”

Adrien, in his mid-thirties, sets the price of happiness in income at 7.000€ and in capital at 1.500.000€. Against these figures, he reckons he is “earning more than a comfortable living”, the result of his studies and years of experience. Here is a closer look at his long-term outlook.

You have nearly reached the bracket where you place financial happiness.
Was that a goal you set for yourself?

Part of what I have built comes down to my own effort. My studies and the experience I gained afterwards allowed me to earn a good salary and invest part of it. Another part comes from my father's death while I was still studying. That loss meant I inherited much earlier than most people do. I did not touch that capital during my studies, nor at the start of my career. It still let me buy my flat at 28 and get a faster start in life than most. Right now, my financial situation goes beyond anything I could have expected.

How are you preparing for retirement?

As a self-employed thirty-something, I invest on my own with a long-term horizon. My generation has been told often enough that we need to take our investments into our own hands, rather than rely on the Belgian state for our pensions.

The stock market makes up a large part of my wealth. It performs well over the long term and requires little effort. With ETFs, funds that track a broad basket of shares, it takes about five minutes of work a month. Given my age, I have time to aim thirty years ahead at least, and I am not too worried about future market downturns. As the saying goes, taking risks is risky in the short term, but over the long term, the biggest risk is not taking any. That holds even truer in the current inflationary climate.

I do question myself, though. Are past returns, around 7-8% a year over the long run, still a reliable guide for the future? Or should we expect lower returns given the sluggish demographics, ongoing de-globalisation and the resurgence of geopolitical conflicts? Still, I believe the stock market will keep delivering returns above inflation, at the very least. Real estate is another way to protect and grow your wealth. That said, it is less passive than the stock market and comes with its own drawbacks. The amount needed for a single property is high, which concentrates risk, liquidity is lower, and there are operational risks such as vacancy, unpaid rent and property damage.

Which risk worries you most about your investments?

The biggest risk I see in the longer term is that we have only ever known a world of economic growth, built on demographic growth. That is no longer the case today, and not just in Europe.

In Belgium, baby boomers are retiring, and the ratio of working to non-working people is hitting its lowest point. How this demographic shift will affect the economy is a big open question. I do not have the answer, but I see many possible consequences for GDP, the government budget, Belgian healthcare, and future stock market returns.

Where does your financial knowledge come from?

Even though I was just a teenager at the time, the 2008 crisis left a strong impression on me. I found it fascinating how an American mortgage crisis could trigger such far-reaching economic and global consequences. That interest in economics pushed me to study business engineering. At 18, I also opened an account with an online broker to try out stock market investing myself, fortunately with small amounts. Today I work in corporate finance, while keeping a strong interest in economic questions and how financial markets work.